Vijay Mallya rules out quitting USL, Sebi to probe lapses

United Spirits chairman Vijay Mallya, who has been asked by majority stake holder Diageo Plc to resign from his position, has said that he has no intention to quit.

"I am not resigning. It's for the shareholders to decide if I should step down (not the board of directors)," he told HT on Sunday.

USL has also said its board has decided to go to the shareholders if Mallya refuses to step down.

Mallya said he has some contractual issues to settle with Diageo. "I hope to settle these issues bilaterally," he said.

The Securities and Exchange Board of India (Sebi) and other regulatory agencies have meanwhile begun looking into suspected irregularities at the company, including about the alleged fund diversion and disclosure-related lapses that Diageo has raised.

The inquiry, which also involved a forensic probe by Pricewaterhouse Coopers (PwC), revealed that between 2010 and 2013, funds involved in many transactions were diverted from the company and/or its subsidiaries to certain UB Group firms, including in particular, Kingfisher Airlines.

Top officials said Sebi will look into all possible violations at USL, as also at other UB Group entities, some of which are separately-listed companies, while others are part of the promoter groups. The role of some individuals, including Mallya, will also be looked into.

The alleged lapses could also be separately probed by the corporate affairs ministry and the Institutes of Chartered Accountants of India.

Mallya reiterated that the issue of financial irregularities raised by PWC pertains to the period before Diageo came aboard and alleged that "politics" was the real cause of the unrest within the company. "The PWC report is for 2010-11. The financial statements for that period were vetted by the board of directors and shareholders. Diageo took over in 2013 and were made fully aware of all aspects of the company's functioning," he said, adding, "If this is not politics, what is?"

Analysts fear that the ongoing spat could cause serious damage to the company's stocks when the markets reopen on Monday. Mallya said the fortunes of the company are Diageo's concern. "Yes, it (a drubbing in the markets) is a possibility," he said. "Diageo and the board of directors (of USL) must be concerned, not me."

(With PTI inputs)